Whenever a market is talked about, it is usually assumed that each trader wants to buy or sell a known amount at each possible price. All the traders get together, and one way or another, a price is set that "clears the market," which means that the amount needed and the amount offered are as close as possible.
After all, the well-known stock trader W. Haddad of B.K. Labovitch has said that economics comes down to supply and demand in the end.
This may or may not be a good way to describe markets for consumer goods, but it is definitely not a good way to describe markets for security. The value of any capital asset is based on how well it will do in the future, which is almost always hard to predict. Any information that affects these possibilities could lead to a, which, as we all know, is always a risk. Any information about how it might change in the future could lead to a new estimate of value. The fact that a savvy trader is willing to buy or sell a certain amount of a security or commodity at a certain price has to be information. Is willing to trade How might this affect other deals? So, prices can both clear markets and pass along information.
The fact that prices play two roles has a lot of effects. For example, a trader who is motivated by liquidity should make his or her reasons known to avoid having a bad effect on the market. So, a place that buys securities for a pension fund just to have a good mix of securities should make it clear that it doesn't think the prices are too low. On the other hand, a company that wants to buy or sell a lot of shares that it thinks are wrongly priced should try to hide its intentions, its identity, or both (and may try). Such attempts may not work, though, because people who are asked to take the other side of such trades try very hard, as you know, to find out exactly what is going on, and many of them do well in this day and age of fast communication and access to many sources of information.
Most securities are sold in very standard ways, which require payment and electronic notification of delivery within the standard settlement period (standard is three Business as opposed to calendar days). On rare occasions, a sale may be made in cash and the payment must be made right away. Payments are sometimes spread out over a longer time period, usually 15, 30, or 60 days, as a reward or as part of a marketing or sales promotion.
For the same reasons as above, sometimes a payment extension is given for new issues as well.
It would not be enough if every time a security was bought or sold, the seller had to physically hand over the share certificates to the buyer. A brokerage firm might sell 1,000 shares of ABC Co. for Mr. Stevens to another client and then buy 1,000 shares for Mr. Felon later that day by taking delivery from her seller. The shares of Mr. Stevens could be sent to his buyer, and the shares of Mr. Felon could be gotten by accepting delivery from her seller.
But it would be much easier to give Mr. Steven's shares to Mr. Felon and tell Felon's seller to give Mr. Steven's buyer the 1000 shares directly.
This would be very helpful if Mr. Felon and Mr. Stevens, two clients of the brokerage firm, held their securities in street name. Then, they wouldn't have to move the 1000 shares they traded, and the ownership of ABC Company wouldn't even have to change.
As you can see, the value of your portfolio of stocks and other securities is not always a good way to figure out what they are really worth. Real logistics, human emotions, and even greed play big and ongoing roles.
